Cable wrong to call for more spending

By Robert Hainault

David Cameron has yet again pledged to get the economy ‘back on track’ while ignoring Vince Cable’s calls to increase spending. He claims that to change tack now would plunge the economy ‘back into the abyss’. I think it’s probably time that we looked at some figures.

Eamonn Butler of the Adam Smith Institute pointed out in October of 2011 that despite general gnashing of teeth about cuts, the government had actually spent more than the previous year. The April-June quarter of 2011 was 1.3% higher than in the same quarter the year before when adjusted for inflation. In fact, despite Cameron pledging early on in his premiership to cut spending on beurocracy, Whitehall spending was 7.2% higher in August 2011 than it was a year earlier.

So, an inauspicious start.

Since then, not much has changed. In 2011 total government spending was £681 billion . Last year it  was about the same when adjusted for inflation. However, what is often overlooked is the interest on the new debt we have incurred. The government spent £90 billion more than it raised. It’s reaction was, as with all previous governments of recent years, to print more money, exacerbating inflation which is a further drain on our national economy and is, in effect, a stealth tax. A tax which leaves people with less money in their pocket, and thus less to spend in the economy.

In 2012 the government paid nearly £51 billion in interest on our national debt. That was twice what they spent on transport and even more than we spent on national defence.

And it’s not getting any better. At the current rate of ‘cuts’ our government will have managed to shrink its expenditure to £668 billion by the year 2014-15 (again, adjusted for inflation), a reduction of only 2.9%. Yet by 2014-15 the interest on our national debt will be £60 billion, and repayments will need to comprise 10% of the budget in order to keep the debt at the current level.

So not only will the national debt not have decreased by 2015, it will be considerably larger. Though the coalition have made some small progress in reducing the deficit, the debt is spiralling out of control, and with economic growth still on vacation there will be no more revenue in 2015 than there is now. In short, we will owe more and have less.

Unless, of course, we can see government spending drastically reduced between now and then, we will not only be unable to keep up with out debt repayments, but we will be unable to stop them growing larger and larger.

What we need, if we are to avert disaster, are sober and serious cuts to the public sector, which still makes up over half of our economy. It is a simple principle: public sector services cost money; private sector services generate money. Getting the economy ‘back on track’ requires only two things: that expenditure should go town and revenue should go up. In order to reduce expenditure public sector services need to be cut to allow the private sector to provide them. This, in turn, generates capital which means more taxable income for the government.

What we must not do is carry on as we are. Worse than that would be an increase government spending. The government is already spending too much on services and too little on debt management as it is. The more we spend on services, the less we have to pay off our debt without incurring yet more debt in order to do it. Though it might be unpopular, the only thing that will save our country from bankruptcy is to drop the secateurs and pick up a chainsaw.

Live or Let Die? 3 ways the young could influence the Coalition’s future

(C)impawards.com

By Devon-Jane Airey

After David Cameron’s decision to cut housing benefits for under 25’s, his overseeing of the closure of EMA, the tripling of tuition fees and youth unemployment still over one million (not to mention Connexion services and the Future Jobs Fund scrapped) , it’s been reasonable to ask what exactly the government has against us young folk. Though, more pressingly, what the young folk can have against the government. I was reading an interesting piece of research this morning that touched upon this subject and so I did a bit of poking around to see how and in what areas the youth have the upper hand.

(1). Young people are often heavily influential in electoral steering points. Youth flocked in their thousands to support Thatcher in 1979 but, with the same merciless hand, were one of the largest groups to distance themselves from the ‘Iron Lady’ when austerity became a sickening cry. What’s more, it was the younger generation of Britain’s electorate that aided Tony Blair to his landslide victory in 1997 – with a remarkable 49% voting for the first ‘New Labour’ leader. However, this figure dropped to a mere 30% when Labour lost power in 2010. In that sense, efforts to secure the youth vote in today’s political climate aren’t solely directed towards the right: research by the Electoral Commission shows that both party leaders will have to work hard to secure this potentially tight grip on electoral victory. Indeed, apparently young people make up one of the biggest groups of unregistered voters and with the aforementioned cuts, the government have the potential to see this group expand even more. Labour’s proposals, therefore, of a mooted voter registration drive could well be a strategic move against their Conservative opponents. But there’s a moral advantage too: if you demonstrate a need to protect and enhance the voice of a certain demographic, they’re more likely to vote for you.

(2) Parties associated with a group’s enfranchisement are also a valued way of gaining a certain group’s vote. Migrant communities and their electoral loyalty towards the Labour party since the party secured their voting rights are a case in point. And, with the debate on reducing the voting age to 16 wedged within political woodwork, this could well be a band wagon party officials searching for a ‘youthful edge’ may want to jump on. There is, however, an element of risk that comes with focusing campaigns on the younger generation as statistics show the older you are, the more reliable you are to turn up to the polling station. In fact the Guardian ICM poll shows that on a scale of 1-10 with 10 being certain to vote, 18-24s score an average of less than 6, compared to over 65s who score 8.6. But with previous examples of their serious clout when rallied to turn out en masse ever present, there perhaps needs to be a more concerted effort to replace political fatigue and disillusion with political enthuse. A job for the politicians, not the people.

(3) Finally, and what is perhaps most telling, is that since the 1970s victorious parties in the general elections have always secured at least a third of the youth vote. Indeed, 42% of 18-25 year olds voted for Maggie T when she mounted her campaign to gain No. 10. The interesting exception for the Conservative party is David Cameron who secured only 30% of the youth vote in 2010. Youth representation in parliament that year, however, rose sharply due to the Lib Dems who have the lowest average age of supporter.  That said, the Lib Dems’ political forecast amongst the young folk in 2012 is, at best, patchy. Interestingly, in a month before the general election some 48% of 18-25’s were prepared to vote Lib Dem. Two years later and that figure has dropped 7 percentage points. Indeed, the Lib Dems’s decisions in office and their subsequent relationship with the younger generation has been compared to that of being dumped by your first love: a painful experience that can burn rather deep. Gaining back such trust, therefore, proves rather difficult.

So with the Lib Dem favourite out of the running, the Conservatives increasingly antagonising the young and Labour clinging loosely onto unstable proposals, it looks like the potentially valuable youth vote is there for the taking…

Local Elections 2012: a powerful blow from an effective opposition, or a voter-toxic Coalition?

Image

c/o NevilleHobson

By Luke Prescott

The local elections in England, Scotland and Wales have seen huge gains for the Labour party. Indeed, if mirrored in a general election vote Labour would have a comfortable majority, with Labour taking 38%, the Tories on 31% and the Lib Dems 16%. Big gains across swing seats in the South and Midlands illustrate that Labour and Ed Miliband are making the required headway into the seats that decide elections; even in Cameron’s own backyard.

So, is Ed Miliband leading Labour back to power for 2015 with an effective opposition? Not exactly; the current government is an opposition in itself and does not require a formal opposition to sit in Parliament alongside it. Cameron and Clegg (along with their lieutenants) wage war with each other on a number of issues (like the AV referendum) and have been doing so for some time. The beleaguered and delayed reform of the House of Lords is likely to give way to more open disagreement between the PM and Deputy PM.

The infighting of the Coalition is not going away, for both parties’, it useful in distinguishing themselves as each Party proves toxic to their opposite party’s core voters. This provides breathing space for Labour, as the Coalition partners save the most visceral of attacks for one another. Such an atmosphere is new to the opposition, and Ed Miliband needs to seize the opportunity to run a clean campaign in the run up to the general election.

Whilst the Lib Dems bleed the Tories by seemingly tying them down to the centre ground, and the Lib Dems haemorrhage voters, Miliband can concentrate, not on attacks, but on saving the NHS and tangible plans to nurture the economy back to health. Tory MP Gary Streeter has suggested that the Conservative party faithful are ”gagging” for the government to veer right on domestic issues traditionally seen to be in the Tory backyard, such as law and order, and the police. These credentials have been damaged of late; the cuts to police forces are seemingly to blame for the riots spreading around London, and the rest of the country.

Not only domestic issues, but the rise of UKIP (securing around 13% of votes where it fielded candidates) is also an inevitable source of tension. UKIP have seized the EU vacuum. Pressure has mounted on Cameron from influential elements of the Tory party to renegotiate and repatriate powers from the EU before the next election.

The pressure to veer right on domestic issues, such as the upcoming Lords Reform and Tory backbenchers eager for a Euro-showdown, will lead to disarray in the Coalition in the lead up to 2015. Ed Miliband has two roles in opposition: to derail the current Government, and then to promote his own. With one of these responsibilities taken care of already, Labour can concentrate on portraying themselves as the natural successors of the beleaguered Coalition in 2015. A positively run campaign will distinguish Labour and Ed Miliband from the pack, as voters shun austerity and hardship for a more optimistic vision.

However, a pit fall may come in the danger of losing national focus. The major legislative debates over the coming years will lead to inter-coalition battles and the media will continue to feed into the idea of a strained marriage between two coalition partners, seemingly putting on a brave face for the kids. Ed Miliband and Labour will struggle to be heard at times, and a danger is that at the next election they may look like the kid at a wedding, struggling to find a seat at the grown up’s table.

The Liberal Democrats – unpopular but not incompetent

By Tom Dymond-Andrews

In case you’d forgotten, the Liberal Democrats are still in Westminster. Nick Clegg is still the Deputy Prime Minister and Britain still has a Coalition government.

With all eyes on Europe, and attention soon to be turning across the pond, even in government it can be easy to overlook Britain’s third party. In terms of how the public view them, this has undeniably been a torrid 18 months. As a party they have a mere 15% rating in opinion polls compared to the Tory 37%, and Clegg has a net score of -19% whilst his counterpart David Cameron boasts an impressive 48% approval rating. Read more of this post

Follow

Get every new post delivered to your Inbox.

Join 605 other followers